Economy
Equity Market Ready for Recovery
By FSDH Research
There are indications that the Nigerian equity market is ready for a recovery in the year 2017 after three consecutive years of decline. The equity market, as measured by The Nigerian Stock Exchange All Share Index (NSEASI), depreciated by 16.14%, 17.36% and 6.17% in 2014, 2015 and 2016 respectively.
As at April 28, 2017 the NSEASI had lost 4.15% of its value. The major factors responsible for the poor performance of the equity market in the last three years are: weak macroeconomic performance, inconsistent policies, weak corporate earnings and portfolio realignment from equities to fixed income securities.
However, looking at the strong growth in the unaudited results that quoted companies released for the period January – March 2017 and the improvement in the macroeconomic environment, we believe the equity market is ready for a recovery in 2017.
As at April 27, 2017, 62 quoted companies had released their unaudited quarterly results for the period January – March 2017.
The total turnover of these companies increased by 41% from N1,450billion in 2016 to N2,042bilion in 2017.
The Profit Before Tax (PBT) increased by 45% from N257billion in 2016 to N373billion in 2017 while the Profit After Tax increased by 29% from N240billion in 2016 to N310billion in2017.
The recent increase in the crude oil price and production and subsequent increase in the external reserves have helped to stabilise the foreign exchange market – a major concern of the foreign investors. The increase in the supply of foreign exchange to meet the input requirements of manufacturing companies should increase their production activities and revenue in the current financial year.
The fiscal and the monetary authorities are implementing policies that should inspire investors’ confidence in the Nigerian economy and market.
Our survey shows that most investors did a lot of portfolio realignment -moving from equities to fixed income securities. The main reason for this was the lacklustre performance of equities in the face of attractive yields on fixed income securities.
The data from the National Pension Commission (PenCom) on the allocation of the Pension Fund Assets as at February 2017 shows that the weight of the pension fund assets on domestic equity dropped consistently from 2014 to 2017.
The weight stood at 13.7%, 10.4%, 8.6% and 7.5% in February 2014, 2015, 2016 and 2017 respectively. These figures are lower than PenCom’s approved pension fund assets allocation weight to equities, an indication that there is room for pension fund assets to allocate more funds to equities.
PenCom stipulates the maximum weights of equities in the investment portfolio of pension assets as follows: Fund I: 30%; Fund II: 25%, Fund III: 10% and Fund IV: 5%. Any pension contributor can make a formal request to join Fund I. Fund II is for active contributors who are below the age of 49 years. Fund III is for active contributors who are 50 years and above while Fund IV is strictly for retirees.
The analysis of the equity transactions on the NSE in the last three years shows investors’ apathy for equity investment.
According to the NSE, the value of equity transactions from foreign and domestic investors declined between 2014 and 2016.
Foreign transactions were N1.54trillion, N1.03trillion and N0.52trillion in 2014, 2015 and 2016 respectively while Domestic transactions were N1.14trillion, N0.88trillion and N0.63trillion in 2014, 2015 and 2016 respectively.
Although the relative size of foreign investors’ participation in the equity market declined between 2014 and 2016 (58%, 54% and 45% in 2014, 2015 and 2016 respectively), the share of foreign investors’ participation was higher than domestic investors’ participation between 2014 (Foreign: 58% and Domestic: 42%) and 2015 (Foreign: 54% and Domestic: 46%).
The foreign investors’ participation in 2016 at 46% was lower than domestic investors’ participation at 54%.
The uncertainties surrounding the foreign exchange policies and the difficulties to access foreign exchange to repatriate capital and profit led to the withdrawal of foreign investors from the market. The stability in the macroeconomic environment and the strong earnings of quoted companies should attract the needed liquidity into the market. Consequently, the equity market should record a strong recovery in the year 2017.
Source: FSDH Research
By Adedapo Adesanya
Nigeria’s maiden shipment under the African Continental Free Trade Area (AfCFTA) has successfully arrived at the Mombasa Port in Kenya.
According to the Nigeria AfCFTA Coordination Office in a statement, the development marks a historic moment for Africa’s trade landscape.
The Senior Trade Expert at the Nigeria AfCFTA Coordination Office, Mr Olusegun Olutayo, said in line with its mandate under the leadership of the National Coordinator, Mr Olusegun Awolowo, the office had coordinated the landmark event.
He said the achievement marked a significant milestone for Nigeria in realising the vision of increased intra-African trade and economic integration championed by the agreement in line with the decision of the AU Assembly at the 31st Ordinary Session of the Assembly.
“In times of escalating geopolitical tension and looming geo-economic fragmentation, AfCFTA presents a perfect opportunity for Africa to leverage trade as a strategic instrument for enhanced market access among state parties.
“This is a historic moment, a realisation of the vision of our continent’s founding fathers and mothers.”
He also said the first consignment which was a synthetic filaments product of Nigeria’s Lucky Fibres Limited (Lush), a subsidiary of the Tolaram Group, was exported under AfCFTA preferential terms.
Mr Olutayo lauded the bold economic reforms of President Bola Tinubu, emphasising their catalytic role in enabling the country’s active participation in AfCFTA, fostering continental economic integration and industrialisation goals.
He also commended the seamless cooperation and commitment from Kenyan authorities, which exemplifies the true spirit of AfCFTA.
He acknowledged the pivotal leadership role of the AfCFTA Secretariat in fostering the success and emphasised the collaborative efforts of the Kenya AfCFTA Implementation Committee and the Kenya Revenue Authority (Customs).
According to him, the shipment, exported under AfCFTA preferential trade terms, underscores partnership, shared vision, the agreement’s potential to transform Africa’s economic landscape and pave the way for a new era of trade-driven prosperity.
The AfCFTA seeks to create a single market across Africa by reducing barriers to trade, investment, and labour.
The agreement’s goal is to increase socioeconomic development, reduce poverty, and make Africa more competitive globally.
On March 21, 2018, the AfCFTA agreement was adopted and opened for signature in Kigali, Rwanda. The agreement entered into force on May 30, 2019 and officially commenced on January 2021
Former President Muhammadu Buhari established the National Action Committee on AfCFTA (NAC) in December 2019.
By Adedapo Adesanya
The Nigerian Securities and Exchange Commission (SEC) has fixed January 31 as deadline for all Capital Market Operators (CMOs) to renew their operating licence.
In a circular to the operators on Sunday, the apex regulatory agency in the country’s capital market said the annual registration renewal would last between January 1 and 31, 2025.
SEC said the annual registration renewal enforcement for CMOs was aimed at ensuring that only “fit and proper” persons operate in the capital market, warning that CMOs without valid registration will be penalised and may be excluded from capital market activities.
”This is to inform all CMOs and the general public that the annual renewal of registration of CMOs for the year 2025 will commence from January 01.
“All CMOs applying for renewal are required to include their 2025 annual subscription receipt from their respective trade groups as part of their application.
“In line with the commission’s Rules & Regulations, all CMOs are to complete the process of renewal of registration for 2025 on or before January 31 via registration renewal portal at www.eportal.sec.gov.ng,” it said.
The commission added that CMOs desiring to make enquiries or get support to complete the process should contact [email protected].
The regulator said it had in 2021 re-introduced periodic registration renewal by CMOs to create a reliable active operators’ data bank in the country’s capital market.
It said the renewal arrangement aimed at updating operators information on capital market for official use by local and foreign investors, other regulatory agencies and the public.
The agency added that the renewals would drastically reduce incidences of unethical practices by CMOs which may affect investors’ confidence and impact the capital market negatively, noting that the exercise will strengthen supervision and monitoring of CMOs by the commission.
By Adedapo Adesanya
The third trading week of 2025 ended on a positive note at the NASD Over-the-Counter (OTC) Securities Exchange, with seven equities on the platform inspiring a 1.24 per cent growth.
Consequently, the market capitalisation of the bourse increased by N21.56 billion during the five-day trading week to N1.075 trillion from the N1.053 trillion quoted in the preceding week (Week 2) as the NASD Unlisted Security Index (NSI) expanded by 37.98 points to 3,111.91 points from the 3,073.93 points it ended in the preceding week.
In the period under review, the volume of transactions went down by 42.1 per cent to 9.45 million units from the 16.30 million units in the previous week, as the value of trades declined by 53.1 per cent to N48.4 million from the N104.11 million, with these transactions completed in 122 deals involving 15 different stocks.
Industrial and General Insurance (IGI) Plc gained 50 per cent in the week to close at 36 Kobo per share versus 34 Kobo per share, Mixta Real Estate Plc increased by 20 per cent to end at N2.58 per unit compared with the previous week’s N2.15 per unit, and Okitipupa Plc rose by 10 per cent to N39.59 per share from N35.99 per share.
Further, UBN Property Plc grew by 10 per cent to N2.20 per unit from N2.02 per unit, Newrest Asl Plc jumped by 9.9 per cent to N31.38 per share from N28.53 per share, FrieslandCampina Wamco Plc surged by 3.7 per cent to N39.65 per unit from N38.22 per unit, and 11 Plc advanced by 0.3 per cent to N256.00 per share from N255.31 per share.
FrieslandCampina Wamco Plc topped the activity chart last week by value with with N0.030 billion, 11 Plc recorded N0.009 billion, Central Security Clearing System (CSCS) Plc raked in N0.004 billion, IGI Plc followed with N0.002 billion, and Geo-Fluids Plc recorded N0.002 billion.
However, IGI Plc was the most traded instrument by volume with 7.5 million units, FrieslandCampina Wamco Plc transacted 0.77 million units, UBN Property Plc recorded 0.38 million, Geo-Fluids Plc traded 0.37 million units, and CSCS Plc posted 0.16 million units.
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